The highest paid public servant in Australia is the Secretary of the Department of Prime Minister and Cabinet, Ian Watt, who earns more than $800,000 per year.

Public sector pay comparisons

$844,800 Ian Watt, Prime Minister and Cabinet

$824,320 Martin Parkinson, Treasury

$798,720 Dennis Richardson, Defence

$798,720 Peter Varghese, Foreign Affairs and Trade

$757,760 David Tune, Finance

$716,800 Jane Halton, Health

$691,200 Gordon de Brouwer, Environment

$665,600 Simon Lewis, Veterans Affairs

$507,000 Tony Abbott, Prime Minister

Source: Remuneration Tribunal

Mr Fahour says the collapse in regular mail being sent across Australia means the company is in urgent need of major reform.

But Angela Cramp from the Licensed Post Office Proprietor organisation, which represents Australia Post licensees, doubts whether Mr Fahour has the right credentials for the job.

"Perhaps we shouldn't have a banker running the business, perhaps we should have somebody who understands the mail business, or the retail business," Ms Cramp said.

She says things cannot be too bad, judging by the salaries of those at the top.

"The top 10 executives [are] earning more than $20 million a year and now we have a business that's broke, supposedly, in dire financial straits and for the last five years," Ms Cramp told the ABC's 7.30 program.

"These same executives have paid over $880 million in dividends to the Government. Was that a valid dividend and if it was, what sort of forward planning does that show that these well-paid executives have managed?"

The Communications Workers Union's Joan Doyle says the Government should not renew his contract and wants his pay cut.

"If we've had to show wage restraint and cop lots of job cuts, we think the very least he could do is show a bit of wage restraint," she said.

Asked about his salary, Mr Fahour refused to be drawn on the issue.

"The matter of compensation is a matter for the board," he told ABC Radio National.

Nine-hundred Australia Post headquarters staff will lose their jobs over the next 12 months but Mr Fahour says no shopfronts will close as a result of the announcement.

Ahmed Fahour says it's all about parcels

Mr Fahour says the company can no longer subsidise distribution of regular mail which he says is delivered at a loss.

"The rate of decline in letters is accelerating at such a pace we do need to reform those services," Mr Fahour said.

Mr Fahour will split Australia Post's operations into two; a retail and shopfront arm and a parcel delivery arm.

"Today Australia Post is a bigger parcel and logistics company than it is a mail company.

"For the first time in 200 years the amount of revenue and the amount of business we do in parcels and logistics is bigger than what we do in mail."

Mr Fahour says the restructure will help meet the demand for services elsewhere.

"The customer's telling us they want parcels and they want stores to stay open and they want them to be open on Saturday," Mr Fahour said.

Australia Post will ask the Government to change the regulations in its corporate plan due in July, possibly aimed at it releasing it from the legal requirement to deliver standard mail five days per week.